A risk-averse individual who owns a $200,000 house and faces the prospect that the house will burn down with the probability 0.05 in any given year will be willing to pay how much of an annual premium to fully insure against such a loss?
A)$5,000
B)More than $10,000
C)No more than $5,000
D)Either more or less than $10,000 depending on whether housing is a normal or inferior good for the individual

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The Answer of A risk-averse individual who owns a $200,000 house and faces the prospect that the house will burn down with the probability 0.05 in any given year will be willing to pay how much of an annual premium to fully insure against such a loss?
A)$5,000
B)More than $10,000
C)No more than $5,000
D)Either more or less than $10,000 depending on whether housing is a normal or inferior good for the individual

A Risk-Averse Individual Who Owns a $200,000 House and Faces